NSE Tightens Rules for SME Firms Eyeing Main Board Shift: Key Changes Explained

The National Stock Exchange (NSE) has revised the eligibility criteria for small and medium enterprises (SMEs) seeking to migrate to the main board on its SME platform. This move aims to enhance the quality and compliance standards of companies shifting to the larger platform.

According to the new rules, SME-listed companies must complete at least three years of listing on the SME platform before they can apply for migration to the main board. This move is a key change from earlier norms and is expected to ensure that only stable and well-established companies transition.

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One of the main financial thresholds outlined by the NSE is a minimum paid-up capital of ₹10 crore for the applying company. Additionally, the company’s net worth must be at least ₹75 crore, and its revenue from operations should have crossed ₹100 crore in the last financial year. The firm should also have recorded positive operating profits in at least two of the previous three financial years.

To ensure sufficient public participation, the NSE has mandated that the company must have at least 500 public shareholders on the date of the migration application.

On the ownership front, the promoter or promoter group must hold at least 20% of the company’s shares at the time of the application. Moreover, their holding should not be less than 50% of what they originally held at the time of initial listing on the SME platform.

The revised criteria also come with a set of clean compliance conditions. The company and its promoters must not have:

• Any admitted proceedings under the Insolvency and Bankruptcy Code (IBC).
• Any winding-up petition accepted by the NCLT or IBC.
• Been subject to suspension of trading or material regulatory actions in the last three years.
• Been debarred by SEBI or any other regulatory authority and
• Any director disqualified or debarred from holding office.
• Furthermore, there must be no pending investor complaints in the SEBI’s SCORES system.

Conclusion
These revised norms are expected to bring more transparency, financial discipline, and investor confidence to the migration process. They will also ensure that only fundamentally strong and compliant SMEs qualify to be listed on the NSE’s main board.